This paper describes a theory of rational emulation and deviance. It assumes that individuals care about relative position (or `status’), and constructs a model of decision-making in social and economic settings. The analysis shows why individuals who want to be different from others will, paradoxically, find it rational to imitate other people. The paper also …
Tag Archives: comparisons
Falk, A., &Knell, M. (2004). Choosing the Joneses: endogenous goals and reference standards. Scandinavian Journal of Economics, 106(3), 417-435.
A growing economic literature stresses the importance of relative comparisons, e.g., for savings and consumption or happiness. In this literature it is usually assumed that reference standards against which people compare themselves are exogenously given. In contrast, findings from social psychology suggest that people play an active role in determining their reference standards. We introduce …